Transcripts For BLOOMBERG Countdown 20140613 : vimarsana.com

Welcome to countdown. Im an edwards. Bloomberg reporters are standing by ready to deliver the stories of will drive your day. Caroline hide his year with a look at mark carneys warning to. Nvestors Ryan Chilcote is following the u. S. Response to rising instability in iraq. His own way. Going hans nichols is in berlin to see why the move may use tesla. The bank of japan sticks to its stimulus plan. John dawson has the latest details from hong kong. That could threaten britains recovery and rate hikes could come sooner than markets currently expect. Thats the warning mark carney gave it the annual Mansion House address. Business correspondent Caroline Hyde has been following the events. Good morning. How soon will the rates rise . Its the impossible question. Stands atmoment it april next year. Be could see many speculating and Interest Rate hike as soon as the end of 2014. Even if this is the most hawkish we have heard him basically since hes taken over at the bank of england, this is the first real recognition that rates could start rising sooner than the market expects. Remainying it will gradually and sticking to the lines then when they do rise, they will rise slowly rather than quickly. Certainly, lets have a listen to what he said last night. Market posehousing an immediate threat to Financial Stability today . It does not. Could it in the future . Yes, it could, especially for we do not learn the lessons of the past. We act now to insure ourselves against future problems before they can materialize because Economic Security comes first. Like theres already great speculation about the exact timing of the first rate hike. This decision is becoming more balanced. Been sooner than Financial Markets currently expect. There is noear, preset course. The ultimate decision will be driven by the data. Is safest to, it conclude, as the npc has, that the scope for Spare Capacity could be used up before policy is tightened and a host of wage indicators and utilization should be watched closely to determine how that is evolving. I think that sums up the key concerns here. It is the Housing Market. It is the fact that in london, prices are escalating far faster than the rest of the u. K. Overall, they are up more than 10 yearoveryear. We heard from him first there. And in me heard from bank of england governor afterwards, mark ernie. He was talking about how the Housing Market shows the potential to overheat. That is his assessment of the risks associated. Hes saying, once again, Monetary Policy will be the last line of defense. They want to make Interest Rate hikes last. Many still out there are still indebted. Household have a lot of money in debt. Boosting Interest Rates could force instability which could choke off this nascent recovery we have at the moment. Recovery is happening far faster than the expected. Theyloyment is at where have not envisioned. This is where it could come in terms of the hike. The effect on the pound has been pretty substantial. There up 7. 9 against dollar this year, the best performing currency against the basket of tens. Housing is key and this is what is so fascinating. George osborne really giving legal requirements. Hes passing the buck over to the bank of england saying to deal with housing demand. I will deal with housing supply. The government saying they will pump money into the contaminate sites. Half a billion pounds going toward that. They will speed up housing but you,o he promises, the bank of england, and you the financial policy committee, have to deal with demand. How . They now have direct the limits. They used to have recommendations on how much people could borrow in relation loaneir saulary and have to value ratios. Perhaps the bank has already jumped the gun here. If youre going to borrow more than half a million pounds, it can only be within four times your current salary. They might use other tools at their disposal. They could tighten affordability test and limit the risky loans banks currently have on the balance sheets. They could go about this in a multitude of ways and its likely the bank of england will start rolling out these ways to bring back demand and have all eyes on the Financial Committee getting these new houses even before theyve had a chance to use the old ones. We will see with a will deliver later this month. President obama under increased pressure to help the beleaguered army in iraq. Ryan chilcote has the details. Good morning. You spent many years in iraq. The insurgents have made their move. What is the Iraqi Government going to do about it . Its clear the u. S. Is looking at the prospect or the possibility of airstrikes. Lets have a listen to president obama yesterday. Dont rule out anything because we do have a stake in jihadists areese not getting a permanent foothold in either iraq or syria, for that matter. Krit,w you have ti fallujah. The isil, the Islamic State of now controls a pretty reasonable swaths of iraq and syria. These are all sunni areas. I think things will really pick up as they start to challenge more shia controlled areas. These are places with shrines that are really important to the she owes. If they go after baghdad, which is where the government sits, this will become a much larger conflict. What will this do to oil prices . Theyyou are in vienna, said it was happening in the north and was not an impact just yet. That uti poised for its biggest gain since december. Ministers may be sure this is not an issue but the market is jittery. Over 100th dollars. 10 ll over 100th brent well over 110. Trend everyone is expecting is an upward one. We talked to a couple of oil analyst in only three of them thought that prices would decline over the next week. All of the Oil Ministers are field,g out that the oil three quarters of them are in the south of the country. A shia controlled area, it was interesting to hear the minister say how these are no threat in the shia area. It shows you how sectarian all of this is. The ported comes out of, loss basra, is in the south. Some feel the kurds are moving to secure. You have pipeline that need to be patched up to take oil to turkey. Now, its more compacted to patch up because you have insurgents kicking around in the area. Very geopolitical already in a market moving story. We are receiving updates from strategists of this morning suggesting nervousness around the story taking edge on other Asset Classes this morning. Ryan chilcote with the latest on the situation in iraq. Elon musk has never been want to follow the crowd and now hes taking a unique approach to test the patents by giving them away. International correspondent hans nichols is in berlin to explain the reasoning behind this move. Good morning to you. Reasoning would be one way to describe it but a massive that is another. He is a Rocket Scientist and he is also a riverboat gambler. Gives announced he will all of the test the patents away for those who use them in good faith. Heres what he said. Tesla motors was created to accelerate the advent of sustainable transport. If we clear a path to the vehicles,f compelling we are actually acting in a manner contrary to that goal. You look at the money tesla is investing in batteries. They are talking about a giga factory. This is the core of what they do in terms of intellectual property. He spoke yesterday with executives from bmw. They have the all electric i3 hatchback that will be a competitor. He encouraged them to use his Battery Technology and talked about his supercharged system. He wants them to build their own a battery factory. If 1000 flowers bloom, this is a remarkable approach overnight. Im not a tesla shareholder. Its an interesting one to sit back and watch and see how this one plays out. Sense of the size of this. How many patents are we talking about here . 160 is what they have filed. ,ou talk about patent trolls samsung has 47,000. Apple has about 4700th. Microsoft is somewhere in between. You look at his competitors in terms of what ford and gm have, they are both in the 6000 patent range. Their Legacy Companies who have been out this form a lot longer. 160 is not a lot but they do have proprietary information. Now, anyone can use it. Its a remarkable development. Hans nichols joining us there from berlin. A warning for mark ernie. Rate hikes should come sooner than markets expect, so what impact would that have on household and Financial Stability . We will discuss all of that next. Welcome back to countdown. The bank of japan Just Announced they have linked their policy decision. Kong withn is in hong more. Sticking with its unprecedented stimulus measures then. No change in a surprise. Good morning to you. Not a surprise but what was perhaps news what they said about the overseas economies. A bit of a change in the wording on that level. One month ago they said overseas economies are starting to recover. Go now they are saying they are recovering. Starting is out. That is a Movement Forward which is clearly encouraging. 70 trillion yen per month. ¥7 trillion per month, i should say. Target. Is about a 2 they are on course to make that target next year without extra easing. The only news out of this again, recovering moderately, no change there. The only real news out of this was the wording of overseas growth, quietly encouraging. How nice. Friday,is lovely for tank you john dawson reporting from hong kong. Investors do not see the bank of england hiking Interest Rates until april but mark carney says a could happen sooner. He warned that higher borrowing costs could undermine Financial Stability. Chief economist at fx pro simon smith joins us now. What a thing to watch last night. Good thing we live in a multiscreen environment. Lets talk about the Mansion House speech. He said the decision is becoming more balanced and it could happen sooner than markets expect. Force. S not a preset what do we do with this information . You take it at face value. As you put that line about how it could happen, i think it is quite pointed the way he put it. I largely agree because i think the rate hike will happen before the end of the year. You are saying that that it would happen by the end of this year, which is not the consensus. Time talked about it last as well. We are in a very low volatility as world. Part of that is created from Central Banks. You think maybe the hike in rates is too early but it does set part of this greater asancial stability mandate much as they sort of have to, not just toward thinking that rates will go up or sometime, it has to be gradual doing one earlier to avoid more aggressive rate hikes later which is also key to the rate rising strategy. They know affordability is an. Ssue in the Housing Market again, emphasizing that they do not target asset prices. It is the indebtedness that worries. You may think, hold on. Raising it will make things worse, but you had to get people used to that. Part of that is putting up rates before the end of the year. He was talking about gradual rate increase is being gradually and limited to the point you are making their. What do we make about all the talk about the Housing Market. Speaker last night, chancellor George Osborne talking about more power to the spc fpc. We have not even seen them use their existing powers yet and now they are getting more. In the Housing Market. It will not happen before the next election which probably means this is a mandate that comes up between the two of them march and april of next year. It will not happen there. Thats interesting. Theyrey, he was saying going to build my house is in the governors said they would worry about the indebtedness issues. Like before the crisis, they could certainly put up the warning shots on that and beat down the government to act on that. We do not always know what happens between closed doors between the government and the bank of england, but we can only imagine. If we start to see interest ,ates being brought forward does that make things politically more difficult or easier if the Interest Rate hike , when it comes, is further away than when the election is going to be . They will be probably may of next year, while they . Ofwe have this sort fiveyear cycle. I think we have moved away. The government has given a huge amount of power to the bank of england. You can say the rate rises a sign that the economy is recovering to sit there with zero rates in say its a sign that everything is well. Saying ahats preemptive rate rises not such a bad thing if it is coached in a right way if it avoids building another housing boom which no one really wants. Simon smith from fx pros. He is staying with us. We continue our conversation about the u. K. Economy and branch out further afield. Stay with countdown. Welcome back to countdown. I am anna edwards. Comments made quite pointedly by carney last night at Mansion House. , tired of the congo zen . Did the p higher ound go . 1. 7150. What matters is divergence. We have had the ecb bring in more easing measures. Potentially the bank of england, as kearney hinted at, putting up rates later this year. They will move to price that more aggressively, lets say. Euro sterling moving below that 0. 8 level and perhaps more leverage or attraction there will be in the currency markets. Its great. We are getting more and volatility and divergence which is what traders always want. You are talking about euro sterling. Some people are looking at interesting signals coming particularly from the fiveyear bond market. We have reacted to the ecb announcement in the last week or so with these unconventional Monetary Policy measures. Whatwhere do you see signals are you reading . Is the euro quite unmovable . Divergentuse of the monetary policies . You look at it from an Interest Rate angle or asset market. Even if you have been anticipating easing from the ecb, what has happened is the asset market performs well in ac money moving to the euro. It has performed relatively well versus expectations that it would weaken. Rallye seen such a huge and we have seen it go from 7 to 2. 8 nearly yielding the same as the u. K. We talked about valuations going of the mainad financial crisis yielding a handful of basis point along with germany and greece. Its not as extreme. Certainly it has improved so much to justify yields going from 7 to 2. 8 . And borrowing costs cheaper than in the united states. That is where it comes from a more necessary move with only a few banks paying. Are you expecting qe from the European Central bank . Its going to take time the acronyms are getting so long to remember. Its not happening until later this summer. Also, buying overvalued assets, is that the best way to do it . Im not so sure. Simon smith from fx pro. Which asian stocks will get a world cup news from brazil . The head of asian equities at Sunrise Brokers joins us here on countdown. Welcome back to out down. Countdown. The u. K. Pound has been on the move. Lets take a break from that story and talk about the brazilian real. That is the most against 31 and otherencies indulgences getting a little bit more expensive as the year has gone on. For those visiting brazil in the runup to the world cup. Strategists suggest that we will see the real weakening. The current forecast, the summation of all forecast is for it to be seven percent cheaper versus the u. S. Dollar by the end of this year after the tournament has finished. Central tank in brazil and its president have been intervening to prop of the brazilian currency. They are trying to get ahead of the inflation issue and curb inflation. In may it came in at. 37 6. 37 . The bank of england governor says rate hikes could come sooner than expected. Mark carney says rising u. K. Mortgage that could threaten the countrys recovery. That comes as chancellor George Osborne promises new powers to curb mortgage lending. Surging property prices have been raising concerns about the potential bubble. Underent obama is increased pressure to launch airstrikes to support the iraq army. Islamic militants are advancing rapidly. That is growing concern iraq will descend into civil war. Japan is maintaining its unprecedented stimulus. The central bank will continue to expand the Monetary Base at a 600th 88 billion per short of a8 billion, 2 target. For more on the japanese economy, we are here with Sunrise Brokers head of asian markets, ben collett. Re going to see the bank of that governor signaling more quantitative easing, or an extension of the quantitative easing plan, is not likely anytime soon . They seem to be changing their mind. Is a lot of expectation they will keep their foot on the gas, but the boj does not need any further clarification. They are using the measure of real inflation. They do not really need to do anything new. There are organic tendencies for inflation. If they take their foot off the gas, i think youll start to see a lot of money come out of the market. We will watch bonds very closely for what they do. Right now, there is really no impetus for them to do anything new. They would just carry on as normal. This, soup needs to be far yet to appear, the elusive third hour. What are we expecting on the third hour . Workplace,e immigration, Foreign Investment reforms . What are you looking for . That are already seeing lot are hoping for Corporate Tax reform reduction in the red tape. These are all big deals. One thing we like is the change in immigration. Were looking at the continuation of this discussion over the casino bill. They will use things like the casinos, any passing of bill to allow gambling. These are small steps that there are very significant. They will fundamentally shift where the focus of the politicians are. They need immigration changes. They need to make it easier to employ lowcost labor to build these casinos and take care of their elderly. This is how we think of putting apparently smaller forms. You dont think a casino will make a big deal in gdp, but it will facilitate a change, a dynamic and the economy. That is what we are looking to capitalize on. Just to give you an update on whats happening in china, we just got the industrial output froms rising to 8. 8 ar a year earlier in line with estimates. Thats pretty much what they were looking for. Reserve cut to the requirement ratio. The bank did not have to hold so much in reserve, if you like. Are expecting more rationing from the government in china to stimulate . Long the china etf for a while. Its causing pain. Done much. Have not theres a lot of internal reviews on corruption and this sort of stuff. I think a do need to do something. We felt for a while the risk for them stimulating the economy is quite high. Heavyweight in china based on that. We see a lot of investors coming in. Do you think the government will be successful raining in the shadow Banking Sector . Reining in . They are limited in their. Bility to execute strategy and the risk of the area through a western lands. But they will do what they say they are going to do. Its a question many look at the two big boys when they speak, thats who you Pay Attention to. Just a cousin the world cup, just for kicks, lets look at one of the stocks you are suggesting just because its the world cup. Its one of the chinese lottery operators. As far as we can determine, they have the only decent or reputable balance sheet. They have a network in place. We have been pushing it for a couple of weeks and its already starting to move. Thats the one way life. Thats the one we like. Youre all about games and entertainment. From Sunrise Brokers. To add the two u. S. Cities where the app is already available. Uber is moving into shanghai to compete there. Will they face the same problems they are currently experiencing in europe . Stephen engles reports. It may be a Disruptive Technology in china, but many just dont know it yet. We grow faster than the others. If uber is doing, shall i say backlash ofre, the what we are seeing from european taxi drivers be just around the corner, right . Uber says no. We provide Premium Services to these middle to highend customers. Im not worried about that. See it yet as a threat. Once it becomes an efficient way for individual consumers to solve their Transportation Needs and grows in size, you will see a little bit more of a push back. There is a long taxi queue. We will try out uber in shanghai and we will see how it works. We will see if it will get us to our destination. Black cars inw the nearby vicinity. 117 rmb,e between 94 17. Now we will request the nearest uber. It only took a minute or so. Requesting. They have the average shanghai wait time to eight minutes from as high as half an hour. Still requesting. The benchmark goal is five minutes, like san francisco. Thanks so much. All cars are currently filled. Please check back again shortly. Last five in the minutes, the line has tripled in size. We tried again and this time he got a car quite quickly. En route. He will be here in four minutes and he is driving an audi a6. Today, an audi. Tomorrow, maybe a tesla. Uber . I can earn a few thousand more yuan more a month but we will not capitalize the taxi market share because the fares are so much higher. The real problem. As another battle going on between rival domestic taxi booking apps. They are simplifying taxi booking, but they are also trying to access the users wallowed through the application. To drive business to their other services. Let the best offering when, right . Win, right . Its not a free market. The government has not yet decided how the pie will be divided amongst them. The fact that the government is even involved is the controversial part. Its not necessarily a bad thing the transport authority is getting involved. There are semiillegal there are some illegal transactions out there. Let the market decide which will move forward in which will perish. Like they have pledged marketdriven reforms and they are playing out on the streets of shanghai. Stephen engle, bloomberg, shanghai. Uber doing uber well. We ride shotgun with brazils army to see what the country is doing to keep players and fans safe. Welcome back to countdown. I am anna edwards. Brazil beat croatia 31 to win the first match. The goal against brazil was an o wn goal by the goalie. Notd cup fever is gripping only people on earth but also in the International Space station. Marek astronauts there kicked around if it all in zero gravity in honor of the start of the tournament. Thanare traveling at more 7. 5 kilometers per second around the world. Dutch forceses in gass onaulo using protestors. The arrested at least five protesters. Most did not approve of hosting the cup because it takes money away from education, health care, and other Public Services according to a recent poll. But stick a closer look at what brazil is doing to keep players and fans safe. Erik schatzker road with the countrys army and police. The soldiers are preparing for an unusual battle. On the soccer field, result is hosting the world cup for the first time in 64 years, and the country is not taking any chances. Lieutenant colonel paulo silva keeping the peace here in one of the cities where 64 matches will be played over the next month. Portugese] his troops have been training for more than a year to confront any number of scenarios. Rowdy foreigners bent on destroying property, angry protest others, anarchists, hostage takers, even terrorists. [speaking portugese] brazil wants to avoid a repeat of last years Confederation Cup won a series of rallies turned into deadly riots. Rio is used to hosting big events like the popes visit in july 2013. For manos, this is all new to such is a lot of the equipment they were used to gather intelligence. Like any big city, it has a command center to monitor streets in high risk areas. Its getting a major up grade for the world cup. 45 million for stateoftheart video to mobile surveillance 4000 more officers. They even have a nap to help residents make immediate contact with the closest cops they even have an app. They are ready to jump in. Like the challenge is just a gun and it will not end with the World Cup Final on july 13. Up. It is all shook the olympics are just two years away. We talk with samuel l jackson. Find out what we asked him to get this reaction. I can get in trouble answering those kinds of questions. [laughter] withlliam hague hangs out Angelina Jolie and brad pitt. That story and more in the newspaper segment coming up next. Welcome back. I am an edwards. From star wars to pulp fiction, his movies have made of the highest grossing actor. He is filming in london right now. He is hosting a ball for his charity. Olivia sterns met with him and asked why he wanted to get involved with his charity. After thinking about it and talking with some of my friends, i realized i knew a lot of people who were cancer survivors. So here i am. Im glad im doing it. Im glad i can do something other than just laying the lip service to something or just write a check for somebody and say heres some money. Though do what you do. Im actively involved. Work. Are also here for it you are the highest grossing actor of all time. You could easily kick your feet up. What is it that drives you . Pretty been in some popular movies. None of that money is actually mine. Its other peoples money. I do have to continue to go to work to generate an income. Its not like they gave me 10 of all of the money of made for every one. You have been in huge films and you are still doing three or four Big Productions per year. Some of your colleagues are kicking up their feet. For what i a passion do. Acting as one of those things that when i discovered it or discovered this was what i wanted to do with my life and it made me want to get up every day and go and do it, when you think about it writers get up and write every day. Painters get up and paint. Actors get up to act. I think. I hope. The ones who are really passionate whether you are doing theater, community theater, a movie, whatever it is you do, or a tv show that you love doing. Hopefully they are not doing it just because they need to get a check. Its a great job. If we dont have art, we dont have a culture. The stuff i dong isnt art. Its just movies. Some of it is just popcorn crap. That. S a bit of truth in ive been going to movies all my life. I tend to do a lot of movies that i want to go and see. Thats part of the beauty and. Oy of doing this job i get to choose roles and characters that i want to pretend to be in a particular type of story and i have an opportunity to go and do that. Who has been your favorite actor to work with . I can get in trouble answering those types of questions. Thats true. [laughter] the enjoy working with majority of the people that i work with. Actors, i generally get along with. I have problems with directors sometime, but i generally get along with all the actors im around. Some remain friends. Some remain great acquaintances that you see places and you enjoy seeing them. Some i remain in contact with and we taxed, we talk, when we get together when im around. Some i play golf with. I have different relationships with a lot of different factors. I think he very deftly he answered that question. Lets put the European Equity trade to the side and talk about whats in the newspapers. Hans, lets start with you in berlin. I was going to do a serious story but then i read this. The semi finals of the french 000 u. S. He makes 550, in winnings. He goes to the casino and lives as a percentage of it. He says quite a bit of money. If you ever make it to the semi finals of wimbledon, i will allow you to lose at least one third of the casino. Yes. Thats fairly unlikely to happen though, if anyone has ever seen my tennis. This is a slightly lighthearted take on a very serious story. Can you guess which one isnt a movie star . It is in the independent today. William hague flanked by two hollywoods finest. Of course, the subject is the and of Sexual Violence in conflict in london. Its got a lot of headlines here. A very worthy cause. William hague is being called hollywood hague. A lighter look is friday. Are what wecats want to look at online. They have eclipsed celebrities. Theyre not as popular as the witty, weird news. Japan and spain like it even more than the brits. Thank you. Well be back after a short break. The bank of england governor says rates may increase earlier than anticipated. Decision is becoming more balanced. It could happen sooner than Financial Markets expect. President obama says he is looking at all options to help iraq fight islamic militants. Insurgents as captured to key cities. Hello, welcome to countdown. I am mark barton. 7 00 in london this friday morning. Welcome to you. Standing reporters are by ready to deliver the stories that will drive your day. Caroline hyde is here with a look at mark carneys investors warning. Rising instability in iraq. Elon musk is going yet away. Hans nickel in berlin to see why tesla. E might boost back to the top stories. Ray kites rate hikes could come sooner than market expects. Caroline hyde, what did he have to say . When are week speaking rates to go up . When are we expecting rates to go up . Many are thinking, wow. The first Major Central Bank to raise rates by the end of the year. The most hawkish he has it in his tenure as the head. Picked upconomy has faster than he or anybody else could have expected. Speculation is rising. He is adding fuel to those flames. Lets have a listen. There is great speculation about the timing of the first rate hike. This decision is becoming more balanced. Thanuld happen sooner Financial Markets expect. But to be clear, the mpc has no preset course. The ultimate decision will be driven by the data. It is safest to conclude, as that a host of labor market capacity utilizations, pricing, and wage indicator should be watched closely to determine how that is evolving. How that slack is evolving. That is interesting, giving the wage data. Wages not growing as fast as anticipated. As inflation. He is trying to say, interestrate hikes will be the last line of defense. It will be graduation gradual when they are raised. Clearly the best performing currency. Look out, pound. The key is controlling the Housing Market. It is. This is why we are worried about instability. Why Interest Rates have been on the agenda. Imf sing market, the house prices up 11 . London the biggest concern. Nationwide Building Society estimating that firsttime buyers in london spending more than half your pay on mortgage debt. House prices at eight times earnings. No wonder he is recognizing the over exuberance in the market. Market posehousing a threat to Financial Stability today . No, it does not. Could it in the future . Yes, it could. Especially if we dont learn the lessons of the past. We act now to insure ourselves against future problems before they can materialize. Economics of security Economic Security comes first. The bank of england is now to tackle demand. In this by the government. They say, before you can make recommendations, you legally have to make direct limits on borrowing. They can limit mortgages in proportion to your salary. Limit loan to value caps. You can only bow you pharrell you can onlyy borrow 60 of the lu of the house. Can you still afford the mortgage . Thanks have already jumped. Banks have already jumped. They say, you can only borrow four times your celery. Already a depressing in the firsttime buyer inquiries. Mortgage approvals. They are flowing. Perhaps they are getting a bit over word about the market. Already starting to cool off slightly in london. The government is saying, bank of england, you tackle demand, we will tackle supply. We will build new homes quickly. Houses and chelsea just got more affordable. For the month of april, down 2. 7 . The average house price there now a meager 1. 9 million pounds. 31 . 31 in that part of london. His gun up a bit. U. S. President brock obama is under increased pressure to launch airstrikes to support iraqis army. An advance by islamic militants. Crocs the question is, what are the Iraqi Government going to do . What is it going to do to respond . How is the u. S. Government going to assist them . We know they are looking at the possibility of airstrikes. Listen tolook president obama. We do have a stake in making sure the jihadists are not getting a permanent foothold. In either iraq or syria. Think about the cities, they are mostly sunni controlled cities. Tikrit, saddam husseins hometown. Insurgents battling the shia led government forces. Along with an iranian battalion of the revolutionary guard. That is the government taking the fight to the insurgents. You still have cities like moto, the secondbiggest in the city. Secondbiggest in the city. And falluja and the west of the country. This becomes dangerous when you see the insurgents threatening and moving on places with shia shrines. Or moving on baghdad, which is where the government sets. Then we could deftly see a big escalation of the conflict. As we see things spread to graphically, what does this mean for oil prices . This is a question we put to the iraq he oil minister. He thinks with the insurgents have done thus far does not matter. Have a listen. Production, all our exports from the south and the south area the south area is very safe. L, we have onlysu small activities. Distribution of the product. Forgive me for misspeaking. That was in vienna. Vienna. Pec meeting in the markets dont believe him. We are seeing a big lee the biggest weekly gain. Wti is over 100. We surveyed two dozen analysts. Three of them think prices will decline. The rest think prices will go up. The trend is clear. Most of the infrastructure and all of the oil, three quarters of the oil, is in the south. It in an area that is firmly controlled by the she has shias. Right now from the insurgents unless they were to take baghdad, which would be massive. Then there would be a question of in general who controls iraq. The issue is, in the north the oneo, one guideline pipeline was taking some oil from the northern fields to turkey and beyond. That pipeline got bombed a long time ago. The idea was they would bomb it. Now the question is, how soon will they be able to repair it . What you are seen in the market is people responding to this larger geopolitical question of what is about happen in iraq. Could we ask receive aesop threatened, theoretically . Forwhat does this mean iraqs big goal of ramping up production . They are struggling to do their 3. 7 Million Barrels right now. 125ne. 5 a barrel dollars a barrel. That is what one analyst said oil could reach. 110 320dy we are above 221 25, that is when he was he pressure on the saudis to already we are above 110. 125, that is to when we are going to see pressure on the saudis. We heard the minister say they were kicking around 113. Moscow has never been one to follow the crowd. International correspondent, hans nichols, is in berlin. It is a gamble. No other way to describe it. A bet that you can get more from open source with your patents and if you protect them then if you protect them. This is all about batteries. Here is how elon musk described it in a conference call. Created tos was sustain the adventure of sustainable transport. If we clear a path but lay down intellectual property lines, we are acting in a manner contrary to that goal. Behind you, some hot language from him. Mr. Musk spoke of executives from bmw. He wants them to use some of his technology pulitzer some of his technology. A 5is talking about million project. Unique. Could be cold a revolutionary approach to what companies do with their intellectual property. Musk wants to give it away. He think there is he thinks there is more value there. An interesting approach. Hans nichols with the latest in berlin. The bank of japan is stuck with record in a mess. What is happening with the boj . Good morning. Is aly, what is happening bit of change of wording about the overseas stitcher wage and overseas situation. 68 u. S. Dollars. What is different from this meeting is the wording on overseas economies. A month ago, they said overseas economies are starting to recover. Now they are saying they are recovering. That is a shift. Positive. Ian lao, the japanese economy is recovering moderately. Meanwhile, the japanese economy is recovering moderately. Again, the signal is no more easing is required. They are on track for the target breed overseas economies are helping. As the overall picture. Meanwhile, chinas industrial output and sales are on the rise. Again, no surprise here. Industrial output for the month of may. That came out, 8. 8 . In line with the median forecast. Retail sales, 12. 5 . A little bit more than the forecast. The risk that they are missing the growth target. They also had new bank lending estimates. The figures today keep them on track for the golf growth target. No big shocks. Shocks. S, john no i forgot it was friday the 13th. We nearly got a shock from the world cup. If you only watch the first 20 minutes as i did. Won gold on they were, the home goal. Coming up on the program, the focus back to the bank of japan. Is inflation targeting contributing to financial instability. Talking about japan. We will get his thoughts on that and the latest developments on the u. K. When we come back. First. Bloomberg. Welcome back to countdown, i am mark martin. Time in london is 17 minutes past 7 00. Our next guest says it is time for a major monetary rethinking. Joining us is our guest stephen king. We will get to your research in a moment. Mark, the reaction from carney, the governor of the bank of england, talking about rate expectations. Forecasts are always under review. What he said is there is a the market was taking next year. Or maybe this year. What has changed . Has been stronger than expected. The labor market stronger than expected. Interest and wage growth has been remarkably weak. He Housing Market is a big concern. The bank of england these days has to worry about hitting its inflation target and also about Financial Stability. That is one of the underlying concerns the bank has. On leverage,builds housing, consumption. Not much experts. Exports. Theh raises questions about sustainability of the recovery. This goes to the of your crux ofhis goes to the your new research. Targeting no longer the answer to life, the universe, and everything . It is part of the answer. No one would suggest you would have rampant inflation or deflation over the long term. You want to have some degree of price stability. Aices moving up words at predictable rate. The problem has been since before the financial crisis, you had a situation where banks are focused on the achievements of low inflation the region leaving the achievements of low inflation. Believing they would deliver it was called the great moderation. Inflation leading to stable growth. As it turned out, we had a huge financial crisis. The experience of the last hundred200 years, the majority of economic and financial crises occur during low inflation. Periosds rather than high inflation periods. Financialissue of stability goes the on and achieving a simple target. Theys you think then that are supposed to reach one target, do they do that in real life . You mentioned the bank of england. The other tools it has at its disposal. The bank of england did allow inflation to run above target for a time because of thought it would come down at some point. Crooks there is a peculiar asymmetry. It has been less relaxed so far. Over the longterm, you want to have times of both to make sure you are sticking to some price stability goal. Since the Global Financial crisis, banks had to think more carefully about objectives. They are shifting away from inflation targeting to targets of growth and unemployment. The problem has been, this is what the ins has identified with the Housing Markets, if you focus on growth, employment, and oneation, you might lose of the big problem Central Banks have is they created a white always available and everyone being bailed out. It encourages the kind of risktaking behavior that leads to the problem might be positive ambiguity. Stephen king, chief global economist. Welcome back to countdown, i edwards. Ards anna positive ambiguity . What does it what is it and why does it matter. Bank you have a central only focusing on achieving the bank hasgets, to to pursue just . Not just price stability but applies different weights to those things that different points in the cycle. Keeps markets guessing as to the direction Interest Rates are going in. The advantage of that is although it means the policy is a little less transport the opposite of where we are now. It actually encourages markets to think twice about making big bets in one direction. The big bets have been part of the reason we have had such financial instability. Using baskets of targets added to the oneway direction . We have Central Banks talking hasnt exactly, it has greeted a low volatility environment. They are focusing only on inflation and growth. Not in the broader financial instability issues. One of the problems is if you have a situation where you have Financial Stability, rapid increases in assets, you might be hitting your targets in the short term could read your ability to do it in the may gorm a go away away dramatically. Japan in the 1980s, inflation was well behaved. But if they had missed moroni asset prices, they could have prevented the deflation that came in the 1990s and beyond. Correction cant maintain you cant maintain three objectives of one tool. The problem there is they are broadly untested. Case,nly in the u. K. Where the market is because of foreign buying, it is not even clear whether macro proof policies will have that much impact. Hence i suspect why the bank of he d is asking where why they should put so much emphasis on traditional levers. Works stephen king, tradition global economist. The psychology of italy plays england in the world cup. How do you score from 12 yards . Our next guest has written an entire book on the subject. This will not be an easy watch if you are in english football fan, but do stay tuned. Welcome back, i am anna edwards. We have talked about what is happening with the pound. Lets focus on the brazilian riau. Real. It has moved against the u. S. Dollar. Most, against most of the major currencies. Visiting brazil for the world cup got more expensive. Forecast suggest it will weaken towards the end of the year. The current forecast is for a rven percent cheaper riau eal. Keep that in mind. The president has been thervening to pop up zillion currency. To tackle the inflation there. That is your fx check read check. Is under obama increased pressure to launch airstrikes. Islamic militants are advancing across the country. There is growing concern that iraq will dissent into civil war. Will will be send descend into civil war. The warning comes as chancellor promises new powers. Haveng property prices been raising concern about a property bubble. And the bank of japan is maintaining unprecedented stimulus. They will expand the Monetary Base at a pace of 670 billion per year. They are trying to boost inflation. Now that the world cup is underway, english football fans can finally look forward to being knocked out of the tournament after a penalty shootout. That is a joke. The distance between the penalty spot and the goal is only 12 yards. A resulting this can cause decades of anguish. One man has used that pain to get to the heart of the matter. Onhas written eight books the art and the psychology of the perfect penalty. Ben littleton. Blends sport it sport, science, psychology. The book is called 12 yards. There is, then. A few weeks since we saw you. England, lets the frank. They are terrible at taking penalties in these tournaments. The first chart shows that. Thats right. In theory, they should not be terrible. They have good penalty takers. But the alltime shootout terrible table. In mindfigure to bear is 78 . The average Conversion Rate from the penalty spot. 66 , way below the average. Germany, 93 . Wise england so bad at taking penalties . When they pay for their clubs, in which men are good at converting penalties. Stephen girard. These are great guys. Iran analysis of 10 years with the penalties across the top lively is to see which nationalities were the best in Club Football. English players came out at 82 and german players, 76 . It is actually a myth. English players in Club Football are much better. What is the secret . How long have you got. Is a national trauma. We lost to germany twice. Of course it was against germany. That had an additional impact of the negativity of the loss. Two leaders later, we lost to argentina. Again, a country with a couple kitted political history. The defeats daschle a country again, a country with a couple kitted political history. These defeats became tied to our national identity. Theres a lot more going on than just, im going to kick it into the goal. What can you do, then, to try to override that pressure . You spoke to some brilliant sports tacticians to hear what they had to say. Quick psychologists have done and also somewhat england is doing wrong. They rush their kicks. They are quick at reacting to the whistle. Quicker than it any other country. They are trying to get it out of the way. Second took an extra in be inake their time control the situation, they would probably do better. Last night, we had the first ever brazilian goal. Was ofenalty which a good penalty or bad . It went in. The goalie got to hands on it. If it goes in, it is good. But he has a couple kate is history. He used to do a run up and stopped before he kicked the ball. To dive,e goalkeeper and then score. But fever changed the rules because of him. They said you cannot slow down. You must up raker momentum. You must not break your momentum. He was furious and lost missed for the additional eight penalties. There was additional pressure. I was waiting to see if he would rush it. He ran across and took it with his right foot. Because it went in, you have to say it was good. That would do a lot for his confidence. He was a different player after the first goal. Chasing the ball and not involved. Once he scored the goal, the pressure had lifted. He was in the center of almost everything good brazil did. I the manager of chelsea dont know if he was joking. He gave an interview. He said, he has lost some big penalty shootouts. He said, leave it to the gods. You can practice or not practice. Give it to the best or worst player. It is up to the gods. Twe;veeds to read yards. There are things you can do as a coach to pick the right choirs players. He said, when youre talking about nonregulated penalty takers, he would tell them where to kick the ball. Youre taking a decision away from you guys. The first thing that goes in a stressful situation are you decisionmaking faculties. When the pressure is on and you are walking to the spot, thinking where should i go if your coach told you, you have less to worry about. All you have to worry about is your routine. I need to focus on that. I will spot the ball, do my run up, and then kick it. Clive woodward, you spoke to the coach of the England Rugby team. He was all about purposeful practice. You cant recreate the tension of the penalty shootout. Golfers cant recreate the pressure to putt. You cant recreate that pressure. You have to act is perfectly so when the moment comes, you know exactly what to expect to read your routine is so spot on you do what comes naturally. Do think the world cup should be decided on a penalty shootout . It has been recently. In 1994. Italy and brazil have both one. Is it fair . It is football at its most basic. All,l cop fumble ab the goalkeeper, and a striker. Two quick questions. The one to one in 2006. The italians. He had one kick to seal his legend and he scored. The worst ever english penalty. There is a list this long to choose from. What is the worst . How long have you got. I think so gate 1996. European championship. I feel like we would have gone on to win that. The biggestcaused trauma to england. Four days earlier, we had won a shootout against spain. If we hadnt lost against germany, we might not have this nightmare. It actually has my heart going to get about italy beating brilliant. Good to chat with you. Do buy this book. Yards. World cup fans will spend the next month glued to the tv screen. Tom gibson takes a look at the classic pastime, the panini m. Icker on them. Albu kids, completing the sticker album is more important than the tournament itself. 640 stickers, it is an unforgiving task. We have produce a bit like 18 billion stickers. Since the 1970s. It is a headache. We start working on the next world cup the day the winners lift the cup. Try not to feel too much too much some finny sympathy. According to mathematicians, and average fan would need to buy 899 tax to complete the lm pakcs to complete the album. Sales have been rising. World cup years, sales have surged. The 14 should be a bumper year 2014 should be a bumper year. One reason could be for the elusive player, the legendary rare sticker. However, panini assist it is down to insists it is down to chance. Our strategy is to know wheres dekkers. We duke reduce we do produce equal quantities. If you find a sticker which people regard as rare, that is is not true. Try telling that to the kids in the playground. Tom gibson, bloomberg. Did you collect them . I did. I love them. Mark carney warns that Household Debt poses a risk to the recovery and a rate right hike could come sooner than expected. How homebuilding stocks may react. Or come back to welcome back to countdown. Lets take a look at the top corporate story. Caroline is here. Lets start with how comments could affect homebuilders. The government handed the government of is up to the bank of england that they can suppress mortgage lending should they wish. They could put caps on the amount we are allowed to borrow. Houses you are going to borrow one. Your loan can only be a certain percentage of the value of the house. Not could limit the price, quite chart so much for your house. Dent house prices. One good thing for builders, they have to build a lot more. In the longer term, this is a growth story for householders. Persimmon, those are the kinds of names that could beating up some of that house building. You are also looking elsewhere the technology stocks. If you are a chip acre. Maker. Look out for the stocks. One ofe atlantic, intel, the biggest chip makers, rose after hours. Second quarter is looking good. Are beingrecasts upped. The First Time Since 2011, intel increasing sales. It is about improving business demand. The man for pcs is growing. Some companies wanting to spend, invest in their infrastructure. Pcs and computers. Good news for the chipmaker. Oil. Rising yesterday, rising today. Above 110 now. Could reach 125, some would say. Eightmonth high at the moment. The most widely traded contract for oil. This is pinned to the violence in iraq. Concerns about supply. This is going to have differing effects in different industries. Keep an eye on oil companies. Bp, shell, giants in europe. They are likely to rise as oil prices rise. Chinese oil prices on the up. If you look at airlines, it will be a concern. Easyjet, air france, keep the and i on the stocks. Updates from japan. The bank of japan governor saying he expects the japanese economy to recover and exceed potential. The impact of tax hikes receding for the summer. ,hat is a kruger oabe didnt on another topic. Corporation tax. The plan by the government is to cut Corporate Tax under 30 in a few years. Starting in 2015. They will be Cutting Corporation tax. They will secure alternative tax revenues. The king in tokyo. Cutting Corporate Taxes part of the third arrow which investors still need to hear more about. Seemingly worked last year. A guest in the program was talking about his expectations surrounding the address. Same Corporation Tax could be on the list of what we will get updated on. We got that. The third arrow, we have not heard enough about in his view. That was immigration, Foreign Investment, tax, and legal reform. Operations moving from the u. K. We will hear more about that coming up next on bloomberg. Stay with us. Time in london 7 51. Watching threeis themes that may drive the markets today. One is u. S. Retail sales. Lets find out the others. You are watching iraq, arent you . Iswhat is happening there concerning. With respect to oil prices. The highest levels this year. They have been in the range for a long time. A concern that iraq could break up. Kurds in the north. They are taking over precooked. Kirkuk. Has fallen to the insurgents. There is a concern that iran might get drawn in. Alongitical uncertainty, with the thing i mentioned earlier. They were yesterday. They werent a great. If you are expecting a significant rebound in u. S. Menomic it ready in q2, for that did not do it. Especially given the fact that q1, we looked like we could get a contraction. Another big theme for u. K. Investors is the overnight transformation of the governor of the bank of england from a dove to a hot. Hawk. Me included. It was only a year ago he was saying to the rest of the households, Interest Rates are not going higher. Less than a year into his tenure, he is saying, they may go higher sooner that markets think. It all depends on the data. It does. Chris he is not saying anything new read he is not saying anything new. He is warning households. Said, itrrectly depends on the data. For me, the key data is the relationship between average earnings and inflation. Average earnings way below inflation. We will not see a rate hike. Its what about the latest out of china . We had numbers in line with expectations in terms of industrial production. Are you confident about the chinese story . Not as optimistic as some people are. The import data earlier this week. Were supposed to believe retail from jumped to 12. 5 11. 9 . In yet Hong Kong Retail sales are weak. Giving that hong kong is a proxy, you would expect them to marry up. Theyre not doing that many a little suspicious. China has limited room to stimulate, which means if they are going to reach the 7. 5 needs to bet, data better. Lets talk football. The last 40 seconds. England, italy, tomorrow night. What is going to happen . Theyre going to push through the wringer. I will be sitting with a bottle of beer. Shaking like this. Its limit they might fall who is going to emit they might fall asleep . I am feeling tired now. I was watching the game last night. Watching that. Split screen. Were all in my saying far be it for me to disagree. England. Michael, thank you. Injury or fridays. We will see you again. Welcome to on the move. We are Just Moments Away from the start of european trading and investors are eyeing iraq with caution as violence drives down the price of oil. Here with me now, Ryan Chilcote and Caroline Hyde. Oil rallies. The u. S. Considers airstrikes. I just got back from opec. I have got the latest in just a few minutes. Meanwhile, i am looking at carney. He is stoking the rate hike could see warns we Interest Rates rise ahead of market expectations. Limittronger talks to mortgage lending, it remains the last line of defense. I will be back in a moment. Markets just opening. Lets check in with Caroline Hyde at the touchscreen. Lets have a little look at how trading is currently forming. We are waiting for the market, just opening this very second. Ftse completely thought completely flat. Italy currently trading down by 0. 3 . We get up and running in the equity markets. At the moment, just higher on the stoxx 600. If we turn lower today, that could drag away, drain away any of the gains we saw in terms of equities. We are still very close to sixyear highs. It is all going to be looking at iraq. Isry about geopolitical risk feeding into the worries on traders. A bit of m